{ "docId": "019dd923-622c-750b-8b98-9727cc72301c", "docSlug": "778e2cbfbfaa", "documentTitle": "Amdocs Limited (DOX)", "authorId": "54_Spruce_Point_Capital", "authorName": "Ben Axler", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2019-01-23 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 85, "pageCount": 128, "prevPage": 84, "nextPage": 86, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 3, "notes": "The slide uses a 'before-after' or 'contradiction' structure by juxtaposing management's vague explanations with the technical definition of PFIC status.", "elementsJson": [ "headline_text", "paragraph", "callout_box", "quote_block", "screenshot" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-9727cc72301c/85", "deckHref": "/decks/019dd923-622c-750b-8b98-9727cc72301c", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-9727cc72301c.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-9727cc72301c#slide-85", "components": [ { "bbox": { "h": 0.07, "w": 0.94, "x": 0.03, "y": 0.91 }, "kind": "callout", "text": "If Amdocs is artificially manipulating its balance sheet to avoid PFIC status, it is not unthinkable that this action could be viewed by the IRS as a form of tax evasion on behalf of investors. We call on management to explain its odd financial behavior and to provide greater transparency into these activities going forward.", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1e016bb1-5c3b-4b66-b808-d429ef38baa1", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "If Amdocs is artificially manipulating its balance sheet to avoid PFIC status, it is not unthinkable that this action could be viewed by the IRS as a form of tax evasion on behalf of investors.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-0f1e-7015-9026-60d82bd5a4db", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.94, "x": 0.03, "y": 0.68 }, "kind": "paragraph", "text": "New As Of FY 2016 20-F: Passive Foreign Investment Company Considerations...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b3902cb8-1012-4906-ab81-1ff3f7034828", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.94, "x": 0.03, "y": 0.16 }, "kind": "paragraph", "text": "Management has been questioned about its short-term borrowing only once – in Q4 FY 2012 – and has yet to provide a sufficient explanation for it, ascribing it to anything from “tactical financing purposes” to “short-term funding purposes” to “cash efficiency.” Other sources suggest that Amdocs may be taking out short-term loans for tax-related purposes.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e8d26756-5af8-4a40-a359-8f17328151c9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.07, "w": 0.94, "x": 0.03, "y": 0.25 }, "kind": "paragraph", "text": "We believe that management may be performing this maneuver to avoid falling under the IRS’s definition of a “passive foreign investment company” (“PFIC”), whose shareholders are liable for higher-than-usual taxes upon the sale of shares or “the receipt of certain distributions.” By artificially shifting the structure of its balance sheet in certain quarters, Amdocs may be altering its PFIC status.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f8d3cb6b-248e-4abf-aeb7-22ad1b787ecf", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"Our cash balance at the end of the fourth quarter was approximately $1.4B. However, this includes the benefit of $200M that we drew down on our credit facility for tactical financing purposes in September. We have since repaid the $200M, which was only outstanding for a few weeks. Our net cash, therefore, was just over $1.2B on September 30.\" — Tamar Rapaport-Dagim, CFO, Amdocs; \"I think the revolver drawing of about $200M, does that have anything to do with this big expansion [with Sprint] that you announced today or a portion of it?\" — Shaul Eyal, Oppenheimer & Co.; \"No, just the cash efficiency, we repaid it a few weeks later.\" — Tamar Rapaport-Dagim, CFO, Amdocs; \"We drew down $120M on our credit facility during Q2 for short-term funding purposes, and the balance has since been fully repaid.\" — Tamar Rapaport-Dagim, CFO, Amdocs", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-0f1e-7015-9026-66ad0e252613", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.21, "w": 0.94, "x": 0.03, "y": 0.43 }, "kind": "table", "text": "Comparison of earnings call quotes regarding short-term debt.", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9afc40b9-c7bd-45c7-a6b5-f5b19a5f951b", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.68, "x": 0.28, "y": 0.03 }, "kind": "title", "text": "Is Management Engaging In Financial Engineering To Avoid PFIC Tax Status?", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e5eb41a8-6bb8-4e6e-8819-697b91cd0849", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "expose_contradiction", "slug": null, "matchId": "dc61e532-9b91-486a-8c6d-e56c24023d0b", "evidence": "Juxtaposing management's vague explanations with the technical risk of PFIC status.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }